USEPA National Vehicle and Fuel Emissions Laborato
2565 Plymouth Road
Ann Arbor, MI 48105
Institutional Affiliation: Environmental Protection Agency
NBER Working Papers and Publications
|October 2018||Farming under Weather Risk: Adaptation, Moral Hazard, and Selection on Moral Hazard|
in Agricultural Productivity and Producer Behavior, Wolfram Schlenker, editor
Farmers in the American Midwest decide on agricultural land use (cropping pattern) and crop insurance in springtime after observing pre-plant precipitation. We examine cropping-pattern adaptation to pre-plant precipitation as a natural experiment. In tandem with the weather experiment, we also exploit a quasi-experiment created by a federal program that sharply reduced insurance deductibles to examine both risk-taking in cropping pattern as a moral hazard of insurance and selection of insurance coverage in response to the risk-taking. Using a 2001-2014 panel of high-resolution spatial data on land use and weather, we present evidence of heterogeneous adaptation in cropping pattern across the large agricultural states of Illinois, Iowa, Nebraska, and North Dakota. We also find evidence ...